THE WEEK ON WALL STREET
Heightened volatility was on Wall Street’s mind last week, as investors continued to focus on valuations of artificial intelligence (AI) stocks.
The S&P 500 Index fell 1.95 percent, while the Nasdaq Composite Index declined 2.74 percent. The Dow Jones Industrial Average slid 1.91 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slumped 3.25 percent.
FACT OF THE WEEK
On November 24, 1954, President Eisenhower’s plane, Columbine III, was officially designated as Air Force One for safety reasons. A year earlier, Columbine II (call sign Air Force 8610) almost collided midair with a commercial plane numbered 8610, with the president on board.
MARKET MINUTE
AI Valuation Worries
Stocks slid over the first half of the week as anticipation continued to build for Q3 results from one of the largest AI megacap tech stocks, due out midweek.
While the decline was led by megacap tech stocks, which typically drag down both the Nasdaq and S&P 500, the Dow Industrials also fell. With the government still playing catch-up on a backlog of economic reports following the shutdown, investors kept a close eye on big consumer-related stocks for insights into the economy.
Then midweek, all three major averages rebounded, with the S&P snapping a four-day losing streak. Sentiment improved as investors turned more positive about another AI firm’s quarterly report due out after Wednesday’s closing bell.
That firm’s results helped boost stocks after the opening bell on Thursday, but prices retreated quickly as investor anxiety built over whether the Fed would adjust rates next month. The Fed’s October meeting minutes revealed divisions among the Committee's voting members. Additionally, the Labor Department's September jobs report painted a mixed employment picture, which might complicate the Fed's decision.
Stocks rebounded on Friday after New York Fed President John Williams seemed to reassure investors that a rate adjustment at the Fed's December meeting was still a possibility. The bounce was jagged, as the rebound had to battle through disappointing economic data on consumer sentiment and manufacturing activity.
More Jobs, but Higher Jobless Rate
The delayed September jobs report came out last week, and showed employers added 119,000 jobs—the strongest monthly gain since April and a rebound from August’s loss of 4,000 jobs (which was later revised to a 22,000 gain). The jobs report was among the first post-shutdown reports to be published by the Labor Department. The unemployment rate in September rose to 4.4 percent, higher than the 4.3 percent economists expected. It was the highest number in four years. This was the Labor Department’s last monthly employment report before the Federal Reserve’s next meeting on December 9-10.
FINANCIAL STRATEGY OF THE WEEK
Trends in Charitable Giving
According to the most recent report by Giving USA, Americans gave $499 billion to charity in 2022.
Americans usually give to charity for two main reasons: to support a cause or organization they care about or to leave a legacy through their support.
When giving to charitable organizations, some people elect to support through cash donations. Others, however, understand that supporting an organization may generate tax benefits. They may opt to follow techniques that can maximize both the gift and the potential tax benefit.
Here's a quick review of a few charitable choices:
- Direct gifts are just that: contributions made directly to charitable organizations. Direct gifts may be deductible from income taxes, depending on your individual situation.
- Charitable gift annuities are not related to annuities offered by insurance companies. Under this arrangement, the donor gives money, securities, or real estate, and in return, the charitable organization agrees to pay the donor a fixed income. Upon the death of the donor, the assets pass to the charitable organization. Charitable gift annuities enable donors to receive consistent income and potentially manage their taxes.
- Pooled-income funds pool contributions from various donors into a fund, which is invested by the charitable organization. Income from the fund is distributed to the donors according to their share of the fund. Pooled-income funds can enable donors to receive income, manage their tax burden, and make a future gift to charity.
Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the pooled-income fund can be obtained from your financial professional. Read it carefully before you invest or send money.
Gifts in trust enable donors to contribute to a charity and leave assets to beneficiaries. Generally, these irrevocable trusts take one of two forms. With a charitable remainder trust, the donor or chosen beneficiaries can receive lifetime income from the assets in the trust, which is then passed to the charity when the donor dies; in the case of a charitable lead trust, the charity receives the income from the assets in the trust, which passes to the donor's beneficiaries when the donor dies.
Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with these rules and regulations.
Donor-advised funds are funds administered by a charity to which a donor can make irrevocable contributions. This gift may have tax considerations, which is another benefit. The donor also can recommend that the fund make distributions to qualified charitable organizations.
Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the donor-advised fund can be obtained from your financial professional. Read it carefully before you invest or send money.
Some people are comfortable with their current gifting strategies. Others may want a more advanced strategy, however, which can maximize their gift and generate potential tax benefits. A financial professional can help you assess which approach may work best for you.